Driving finance strategy amid change
Interview with Peggy Smyth, National Grid US CFO
Peggy Smyth discusses her role in developing and implementing company strategy amid changes in the energy distribution market, and talks about how she is helping to advance the company's commitment to sustainability. She also describes her role in ramping up the finance organization's analytical and communication skills, and how her personal and career experiences shaped her customer-first mindset.
At National Grid US, finance plays an important strategic role amid disruption in the utilities industry, says Peggy Smyth, who joined the company in 2014 as CFO.
What is your role in shaping National Grid's strategy in the US amid changing dynamics in the energy marketplace?
Peggy Smyth: With the energy industry changing so much, the most important part of our strategy is staying close to our customers as their energy consumption behaviors and expectations evolve. The CFO role is central in delivering on this strategy. As chair of our Senior Executive Sanctioning Committee, I play a lead role in evaluating the business case to fund projects and making sure they align to our goals and reduce costs for customers. In the US, we have four operational jurisdictions—New York, Massachusetts, and Rhode Island—and our federally regulated service offerings under FERC. I work closely with the presidents of each of the four jurisdictions, and with state and federal regulators, to execute on our growth strategy of developing customer-focused energy programs.
One example of these programs is our Gas Business Enablement program, which we've undertaken to transform the way we provide gas services to our customers. Finance is collaborating with our operations team to build the program, as well as with regulators to implement new ways of providing service to National Grid US's customers.
What is your role in developing National Grid's sustainability strategy?
Peggy Smyth: At National Grid we look at sustainability through three lenses in an effort to make decisions that are good for our customers, our environment, and our business. This includes a robust commitment to health and safety practices, the diversity of our workforce, and in making our business operations more resilient and energy efficient. Sustainability reporting is also something that I have taken a personal interest in advancing at National Grid. Currently, we disclose our greenhouse gas emissions to the Carbon Disclosure Project, and we're studying how to implement recent recommendations of the Financial Stability Board's task force on climate-related disclosure. CFOs can no longer be standing on the sidelines when it comes to sustainability reporting; we need to be at the forefront of the conversation. We encourage continuous learning at the company, and that's why I recently took it upon myself to earn the Sustainability Accounting Standards Board's FSA Credential. I want to help drive the industry forward in creating a common framework for reporting sustainability metrics.
As a company, we're also on the frontline advocating for programming that pushes our regulatory model forward toward greener options, and this will require that we work with regulators around new financing models. In our Smart Grid program in Worcester, Massachusetts, for example, we've connected 15,000 homes and businesses to smart meters, giving customers the ability to see their usage patterns and adjust them accordingly. Over the length of the two-year pilot, the average residential customer saved over $200. We're planning to do the same thing in New York. We're also looking at the electrification of transportation, and piloting new programs to increase the adoption of electric vehicles. Moving toward technologies like this is good for our communities, good for the environment and good for our business.
What have been your top priorities for the finance organization?
Peggy Smyth: When I became CFO three years ago, I knew we needed to make some changes to prepare for the future. Just as energy markets are shifting rapidly, our business models need to adapt to keep up with the expectations of our customers. My goals for the finance organization came to be known as "Peggy's Four-Point Plan."
The first priority is excellence in financial reporting, ensuring we capture the right data, understand and analyze it to identify trends or hotspots, and then provide insights with that data to our business partners and to our external stakeholders. An example of how we're executing that priority is the role finance now has in providing data, analysis and insights for each jurisdiction's monthly reviews and reports. These culminate in a quarterly deep-dive of the US business's operating performance, led by John Pettigrew, our CEO; Andrew Bonfield, our Global Finance Director; Dean Seavers, our US President; and myself.
Second is always being rate-case ready. We work in a region that has some of the oldest infrastructure in the country, and we need to accelerate the pace of replacing these assets with newer, more reliable ones for the benefit of our customers. We have reinvigorated our rate-case filing process, and in the past year or so, filed three successful rate cases that will allow us to better meet customer needs.
The third priority is enhancing the finance team's capabilities. With this industry changing so rapidly, our finance team must have the right skillset to help the company respond quickly and nimbly to disruption. We assessed the competencies of every person in the finance organization, including myself. We found that we have people who are really good at analyzing data, but we needed to up our game in how we communicate our analyses, develop relationships with the business, and deal with change. We built a roadmap to close those gaps, using a combination of recruitment, communications and leadership development. The goal is that each member of the finance team is seen as a trusted advisor in delivering financial strategy for the company.
My fourth priority centered on establishing a company-wide culture around controls. Everyone at National Grid US needs to understand our key controls and their responsibility for making our controls processes work correctly. We're investing about $three billion a year in infrastructure, with many people across the enterprise helping to deliver on related projects, from the capital allocation phase to the capital build-out process. We've undertaken a huge education effort to build a shared culture around process and controls.
What prior career experiences have helped you as CFO?
Peggy Smyth: My customer-first mindset has been important as both a leader of finance and in developing our customer-centric strategy. My background in public accounting was a great experience because it is so customer-centric, but my formative lesson in prioritizing the customer isn't on my resume. When I was 10 years old, my two brothers and I delivered newspapers and had a lot of elderly customers on our route. Often, we were the only people they would see. We built our business by more than just delivering the paper. We would run errands, pick up milk at the store, little things that people really appreciated. I've carried that lesson in putting the customer first throughout my career—and these are the same neighbors that are our National Grid US customers today.
What career advice would you give to women in finance aspiring to be CFOs?
Peggy Smyth: I think women sometimes hold themselves back, by trying to have all the 'i's' dotted and the 't's' crossed before they'll take a new role. They might let an opportunity slip by because they only have 75 percent of the skills, whereas men often won't wait to have 100 percent of the qualifications before going for a job. So I encourage women to just go for it, because if you wait for perfection, it's never going to come.
Editor's note: This article is part of an ongoing series of interviews with CEOs, CFOs and other executives. Ms. Smyth's participation in this article is solely for educational purposes based on her knowledge of the subject, and the views expressed by her are solely her own. This article should not be deemed or construed to be for the purpose of soliciting business for National Grid US, nor does Deloitte advocate or endorse the services or products provided by National Grid US.